The National Company Law Tribunal (NCLT) has removed insolvency resolution professional (RP) Jitender Kothari from the insolvency proceedings initiated against Reliance Communications Ltd., following a complaint by Anil Ambani. The tribunal observed that the RP had indulged in a “roving inquiry” by seeking documents unrelated to the core issue—namely, the determination of debt and default in connection with Ambani’s personal guarantee for a corporate loan.
With immediate effect, the NCLT discontinued Kothari’s services and appointed Prashant Jain as the new RP in the case.
An application was filed by Anil Ambani on January 16, 2024, requesting the Tribunal to reject Kothari’s report, which was filed on May 31, 2021. Anil Ambani also sought the replacement of Kothari with a new resolution professional to prepare and submit a fresh report under Section 99(1) of the Insolvency and Bankruptcy Code (IBC).
According to the points noted in the NCLT’s order,Anil Ambani alleged, “The RP has acted in undue haste, denying a fair and proper opportunity to the applicant to provide the required information, after having initially sought it. The applicant also alleged that the RP exceeded the mandate of the IBC by seeking unrelated information, demonstrating bias, and denying a fair opportunity during the period of COVID-19-related restrictions.”
Kothari opposed the application, denying any bias in discharging his duties as resolution professional. He contended that he had granted the mandatory seven-day period for Anil Ambani to submit the required information and argued that his actions adhered strictly to IBC timelines. “No prejudice was caused to the applicant even if he was restricted due to COVID-19 conditions, as he has not shown that he had any further material that could have impacted the RP’s report,” the RP stated in his response, as recorded in the order.
However, the tribunal, in its ruling, held that, “It is pertinent to examine whether the opinion formed by the applicant is founded on rational and objective considerations. We find that the RP acted in haste while discharging his duties under Section 99 of the IBC and ought to have taken into account the ground realities arising from the COVID-19 pandemic.”
It added, “A reasonable apprehension of bias arises from the RP’s request for information via an email dated 25.08.2020, which was not relevant to the matters in the company petition. A reasonable person fully aware of the facts could indeed perceive a bias.”
The tribunal also cited the Dilip Jiwarajka case, stating, “The Resolution Professional cannot indulge in a roving inquiry and may only seek information or documents that are strictly relevant to the examination of the application. In the present case, the documents sought through the 25.08.2020 email were not connected to the application, which only seeks to determine the existence of debt and default by the personal guarantor.”
The case arises from a personal guarantee executed by Anil Ambani on September 23, 2016, in favor of the State Bank of India (SBI) to secure credit facilities for Reliance Communications Limited. The credit facility was classified as a non-performing asset (NPA) from August 26, 2016. SBI invoked the personal guarantee on January 31, 2019, demanding Rs 1,384.81 crore, and subsequently filed an application on March 12, 2020, to initiate insolvency proceedings against Anil Ambani.
